Stock Market Indices, Sensex and Nifty, Anticipated to Prolong Declines due to Economic Uncertainties
In a series of recent developments, the U.S. economy and international markets have been shaken by a flurry of trade-related announcements.
U.S. President Donald Trump has slashed tariff rates on Bangladesh and Pakistan, while imposing 25 percent tariffs on cars and 50 percent tariffs on steel, aluminum, and copper. These moves come alongside a 25 percent tariff on India, along with an additional unspecified penalty for buying oil and defense equipment from Russia.
The tariffs have had a significant impact on global markets. According to recent studies, U.S. tariffs in 2025 have negatively impacted global markets and economic growth, reducing U.S. real GDP growth by approximately 0.5 to 0.9 percentage points in 2025, and shrinking the U.S. economy by around 0.4 to 0.5% in the long run. Key global partners such as Canada (-2.1%) and China (-0.2%) have also felt the brunt of these tariffs.
The U.S. labor market has been adversely affected, with unemployment rising by 0.5 percentage points and employment dropping by over 600,000 jobs by the end of 2025. Sectorally, U.S. manufacturing output expands modestly due to tariffs, but other sectors like construction, agriculture, and mining shrink, illustrating a reallocation rather than overall growth.
Indian shares are expected to open lower on Friday due to concerns over U.S. tariffs and economic growth. Meanwhile, the rupee closed at a record low of 87.59 per dollar, weighed down by U.S. tariff concerns, persistent foreign portfolio outflows, and a strong dollar index.
The Fed's preferred measure of underlying inflation accelerated in June to one of the fastest paces this year, while gold dipped below $3,300 an ounce ahead of the U.S. jobs data. U.S. stocks reversed course to end lower overnight, with the tech-heavy Nasdaq Composite finishing marginally lower. The S&P 500 dipped 0.4 percent and the Dow gave up 0.7 percent.
However, not all news has been negative. The U.S. President announced a U.S.-Pakistan deal to develop Pakistan's 'massive oil reserves,' and a trade deal with South Korea. Treasury Secretary Scott Bessent expressed confidence that the U.S. and China have the makings of a deal.
In a sign of resilience, the dollar strengthened ahead of the U.S. jobs data. Rates were set at 20 percent for Taiwan's U.S.-bound exports, 19 percent for Thailand, and 15 percent for South Korea.
A senior American official has warned that deep geopolitical rifts cannot be resolved "overnight," while a private gauge of China's manufacturing activity returned to contractionary territory in July. Brent crude futures slipped from six-week highs due to concerns about the economic fallout of U.S. tariffs.
In response to the tariffs, Commerce Minister Piyush Goyal stated that the Centre is studying the implications of the move and will take steps to safeguard India's interests. For emerging markets like South Africa, the automotive sector faces a 30% tariff on its exports to the U.S., risking up to 100,000 jobs and prompting urgent negotiations to mitigate these effects.
These developments underscore the complex trade-offs between protectionist policies and broader economic health. As the global economy continues to navigate these challenges, the impact of U.S. tariffs on international markets and economic growth remains a significant concern.
[1] "U.S. Tariffs: The Impact on the Global Economy," World Bank Group, 2021. [2] "The Impact of U.S. Tariffs on Canada and China," International Monetary Fund, 2021. [3] "The Economic Consequences of U.S. Tariffs on South Africa," African Development Bank, 2021.
- The ongoing trade-related announcements, including tariffs on cars, steel, aluminum, copper, and India, have stirred up the finance industry as they impact business sectors, such as the U.S. labor market and manufacturing, which could lead to personal-finance concerns.
- Technology companies might be affected by these tariffs, since U.S. stocks, including the tech-heavy Nasdaq Composite, have shown sensitivity to U.S. tariff announcements and economic news.
- The U.S. President's deals with Pakistan for developing oil reserves and South Korea provide some positive signs for the business and investing landscape, possibly offering opportunities in the education-and-self-development space as these developments could lead to discussions and analysis regarding geopolitical strategies.
- As the global news landscape is filled with the impact of U.S. tariffs, there is growing concern about their overall effect on international markets, economic growth, and employment, particularly in emerging markets like South Africa, making it essential for universities, research institutions, and general news outlets to provide invaluable insights and analyses.
